Phillips Chemical Co. v. Dumas Independent School Dist., A-6639
| Citation | 159 Tex. 116,316 S.W.2d 382 |
| Decision Date | 18 June 1958 |
| Docket Number | No. A-6639,A-6639 |
| Parties | PHILLIPS CHEMICAL COMPANY, Petitioner, v. DAMAS INDEPENDENT SCHOOL DISTRICT, Respondent. |
| Court | Supreme Court of Texas |
Rayburn L. Foster and Harry D. Turner, Bartlesville, Okl., C. J. Roberts, Thomas M. Blume and C. Rex Boyd, Amarillo, for petitioner.
James W. Witherspoon, John D. Aikin, Wayne E. Thomas and Earnest L. Langley, Hereford, for respondent.
Phillips Chemical Company, petitioner herein and plaintiff in the trial court, uses and occupies, as Lessee, a chemical plant owned by the United States Government known as 'Cactus Ordnance Works' in Moore County, Texas. Phillips went into possession on August 16, 1948 under and by virtue of a lease contract between the Secretary of the Army, representing the United States of America, as Lessor, and Phillips Petroleum Company, as Lessee. The lease was for a primary term of 15 years with option on the part of Phillips Petroleum Company for renewal of two five year terms, and a further provision that any additional holding over would be on a year to year basis. The Government had certain options for termination of the lease after notice and happening of certain contingencies. This lease was immediately assigned by Phillips Petroleum Company to Phillips Chemical Company and the Chemical Company has operated the plant at all times since possession was taken under the lease.
The Government plant is located within the limits of Dumas Independent School District and that body has sought to collect school taxes thereon for the years 1949 through 1954, inclusive. Chemical Company, as plaintiff in the trial court, brought this suit in the District Court of Moore County, Texas, to (1) enjoin the School District from attempting to collect ad valorem taxes from it on the 'Cactus Ordnance Works'; and (2) to cancel the taxes on the tax rolls of the School District on said property for the years 1949 through 1954. The trial court severed the question of the right to tax from the question of valuation, and upon trial before the court, without a jury, judgment was rendered cancelling all taxes through March 16, 1950, and permanently enjoining the collection of such taxes for such period upon either the property or the leasehold estate, but validated all taxes after such date and as to these taxes refused the relief sought. Chemical Company appealed and the Court of Civil Appeals affirmed the judgment of the trial court. 307 S.W.2d 605. Each party applied for a writ of error and both applications were granted. We affirm the judgment of the courts below.
We first consider and discuss the application of the Chemical Company. It has assigned 13 points of error. These points attack the judgments of the courts below; first, on the basis that there exists no lawful authority authorizing taxation to the Chemical Company of either the Government-owned 'Cactus Ordnance Works', or the leasehold estate therein; and, second, on the basis of whether the leasehold estate of the Chemical Company was assessed by the School District, as distinguished from the assessment of the proper itself, or as a fee interest. After the end of World War II the United States Government had on hand a number of plants which it had constructed for the production of material and supplies needed to effectually wage that war. In order to keep these plants and equipment in working condition and available to the Government in case of another emergency it was decided, after careful study, to sell some of the plants to private operators with a 'recapture' clause for the plants to be returned to the Government for a consideration; and to be operated by the purchaser solely under Government direction and control for the exclusive use of the Government in the event of another war or the declaration of an emergency. Certain other plants and equipment, which included 'Cactus Ordnance Works' were to be leased by the Government to private operators with like provisions for Government control and operation in the event of another war or existence of an emergency; also provision was made in the leases authorizing the delivery of possession to the purchaser in the event the Government exercised its option to sell. Adequate legislation enabling the Government, through its proper officers, to make these sales or leases was passed by Congress. This plant was leased to the Chemical Company under the provisions of 'public Law 364-80th Congress', codified in part as 10 U.S.C.A. § 1270 et seq.* Section 1270d provides in part that, 'the lessee's interest, made or created pursuant to the provisions of sections 1270-1270b, 1270d of this title, shall be made subject to State or local taxation * * *.' This Act was passed in 1947. This was a specific consent of Congress that such government property was subject to state or local taxation.
In the lease to this plant, the Chemical Company agreed 'that the Lessee shall pay to the proper authority, when and as the same becomes due and payable, all taxes, assessments, and similar charges which, at any time during the term of this lease, may be taxes, assessed or imposed upon the Government or upon the Lessee with respect to or upon the Leased Property. * * *' Thus we see the matter of local taxes was taken into consideration by both parties in arriving at the amount of rental to be paid to the Government by the Chemical Company for the use and occupation of 'Cactus Ordnance Works.'
The School District relied mainly upon Article 5248, Vernon's Annotated, Texas Civil Statutes, as amended, effective March 17, 1950, to sustain the validity of their taxes. Chemical Company attacks this statute as being unconstitutional and void on a number of grounds. The principal ground is that such statute attempts to tax property belonging to the United States of American and is therefore unconstitutional. Prior to 1950, Article 5248 read:
'The United States shall be secure in their possession and enjoyment of all lands acquired under the provisions of this title; (Federal Use) and such land and all improvements thereon shall be exempt from any taxation under the authority of this State so long as the same are held, owned, used and occupied by the United States for the purposes expresses in this title and not otherwise.'
Article 7150, subd. 4, Vernon's Annotated Texas Civil Statutes, provides an exemption from taxation of 'all property, whether real or personal, belonging exclusively to this State * * *, or the United States, * * *.'
The Legislature of the State of Texas being of the opinion that an emergency existed because there were 'no adequate provisions' for the taxation of the lands and improvements owned by the United States of America, which are used and occupied in the conduct of private businesses and enterprises by persons, firms, associations of persons, and corporations, and that funds badly needed by the State and its political subdivisions were being lost by reason of these properties escaping taxation, amended Article 5248. (Sec. 1, Acts 51st Leg., 1st. C.S., p. 105, ch. 37, effective March 17, 1950). There was added a proviso for the taxation of personal property belonging to the user and operator of these plants located on the lands owned by the Government and a further proviso '* * * that any portion of said lands and improvements which is used and occupied by any person, firm, association of persons or corporation in its private capacity, or which is being used or occupied in the conduct of any private business or enterprise, shall be subject to taxation by this State and its political subdivisions.' The caption of the amended act specifically covers this part of the amendment. Section 2 of the Article is the severability clause and Section 3 repeals all laws and parts of law in conflict with the Act to the extent of the conflict.
In its application for writ of error, the Chemical Company admits that this language is clear and plain and could refer to nothing other than the property itself. Further it says, 'this Honorable Court would certainly be justified if not compelled to find, from the words of the second proviso, (the one immediately quoted above) that it is the entire property interest which the statute says shall be subject to taxation.' This is followed by the contention that such construction of the statute would violate both the Constitution of the United States and of Texas. We agree that it was the intention of the Legislature, in amending Article 5248 to make the value of the entire property belonging to the United States Government, if used and occupied by private business and operated for profit, taxable to such user and operator. Article 8, Section 1 of our State Constitution, Vernon's Ann.St., provides for taxation of all property within the State in proportion to its value. Article 7145, Vernon's Annotated Texas Civil Statutes, is to the same effect. Article 7146, Vernon's Annotated Texas Civil Statutes, provides in part that 'real property for the purpose of taxation, shall be construed to include the land itself, * * * all buildings, structures and improvements, or other fixtures of whatsoever kind thereon, and all of the rights and privileges belonging or in anywise appertaining thereto * * *.'
State v. Wynne, 134 Tex. 455, 133 S.W.2d 951, 956.
Article 8, Section 17 Constitution of the State of Texas, Vernon's Annotated, provides:
'The specification of...
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Phillips Chemical Company v. Dumas Independent School District
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